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​Mortgage Resource Centre

Helpful information about mortgages

 

​Managing Your Mortgage

​As a homeowner, you have many options available to you. Our mortgage specialists are available to discuss options available to you based on your financial goals.  They will help find the right mortgage product to suit you.

Our credit team can make your mortgage renewal process effortless. 

To choose the mortgage terms that fit your circumstances you need the advice of a mortgage professional. 

Your financial goals are important to us. 

Talk to us about how much you can save by reducing your amortization.

Our standard, closed mortgage terms allow you to prepay up to 10% of the original principal mortgage balance each year without penalty. 

This prepayment privilege is non-cumulative, meaning if you wish to pay 25% of the original principal balance, a prepayment penalty will be calculated on the amount over 10%.

Prepayment charges are calculated for Closed Mortgages in the following circumstances:  

  • If you pay more than 10% (non-cumulative) of the original principal balance of the mortgage in each 12 month period, the cost is 3-months additional interest on the amount over 10% that is prepaid.  Peace Hills Trust does not use the Interest Rate Differential (IRD) method to calculate a prepayment charge against any of its mortgage products, making it easier for you to determine the cost verses advantages of mortgage prepayment
 
 
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Mortgage Calculator

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Mortgage Prepayment Calculator

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Mortgage FAQs

Fixed Interest Rate Mortgages

  • Your interest rate will not change throughout the entire term of your mortgage
  • You will know exactly how much your monthly payments will be and how much of your mortgage will be repaid at the end of your term

Variable Interest Rate Mortgages

  • Your interest rate may fluctuate from time to time as it is based on current market conditions, it changes when Peace Hills Trust Prime Rate changes
  • If your interest rate decreases, your payment amount will remain the same, but more of your mortgage payment is applied to the principal balance owing
  • If your interest rate rises, your payment amount will remain the same, but more of your mortgage payment will go toward interest

Open Mortgage

  • You can pay off the mortgage at anytime without penalty. You can also make additional payments without prepayment penalties.
  • Interest rates are typically higher than rates for closed mortgages (it’s difficult for a lender to forecast returns due to the flexibility in payments)

Closed Mortgage

  • Requires you to make set payments at set times throughout the term of your mortgage
  • You cannot pay out a closed mortgage early without a penalty. Prepayment without penalty on a closed mortgage is restricted to the prepayment privileges outlined in your mortgage loan agreement
  • Interest rates are typically lower for this type of mortgage

Long Term

  • A long term mortgage is generally for 3 years or more
  • The mortgage rate is generally higher than that of a short-term mortgage, but it can provide security to the borrower by fixing the payments and the interest rate for the term of the mortgage. If mortgage rates are presently reasonable and the borrower has a tight budget, generally the best option would be to go long-term in order to avoid unexpected costs

Short Term

  • A short term mortgage is usually less than 3 years. 
  • A short term mortgage is a good option if you believe interest rates will drop by your maturity date. Usually, the shorter the term, the lower the interest rate.
  • If your down payment is less than 20% of the purchase price or appraised value of the property, you will typically need a high-ratio mortgage
  • A high-ratio mortgage will require mortgage default loan insurance by a mortgage insurer, such as Canada Mortgage and Housing Corporation (CMHC)
  • The mortgage default loan insurance premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments
  • Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price
  • Mortgage loan insurance helps protect lenders against mortgage default and enables consumers to purchase homes with a minimum down payment of 5% with interest rates comparable to those with a 20% down payment
  • To obtain mortgage loan insurance, lenders pay an insurance premium. This cost is passed on to you
  • The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage (calculated as a percentage of the loan and is based on the size of your down payment). The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

Please Note: Mortgage Loan Default Insurance should not to be confused with Mortgage Life Insurance.

To see current CMHC standard premium percentages for a typical purchase transaction of a residential property visit CMHC's site by clicking here. 

Notes:

  • Assumes a 25 year amortization period. For premium on increase to loan amount for refinance,assumes no change to the original remaining amortization period
  • The exact premium will be calculated when you are approved for a mortgage
  • The Mortgage Default Insurance premiums are not refundable if your mortgage is paid early
  • A 10% premium refund may be available when CMHC Mortgage Loan Insurance is used to finance anEnergy-Efficient Home.
  • Example of a Mortgage Default Insurance premium calculation:
  • Mortgage Amount: $100,000.00
  • Loan-to-Value Ratio: 95%
  • Premium on Total Loan Amount: 4.00%
  • Premium Payable: 0.0400 x $100,000 = $4,000.00

Visit CMHC Mortgage Loan Insurance for a list of additional Mortgage Loan Insurance Premiums and further details on Mortgage Default Insurance.

  • Canada Mortgage and Housing Corporation (CMHC) is Canada’s national housing agency. Established as a government-owned corporation in 1946 to address Canada’s post-war housing shortage, the agency has grown into a major national institution
  • CMHC is Canada’s premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research
  • CMHC works to enhance Canada's housing finance options, assist Canadians who cannot afford housing in the private market, improve building standards and housing construction, and provide policymakers with the information and analysis they need to sustain a vibrant housing market in Canada
  • CMHC reports to Parliament and the public on its operations, including mortgage loan insurance, through its annual Corporate Plan Summary, its Annual Report and its Quarterly Financial Reports
  • When a lender has received CMHC Mortgage Loan Insurance on your home mortgage loan and you are considering selling and purchasing another home, there may be a mortgage portability option you can exercise
  • Mortgage Portability allows the repeat user of CMHC insured mortgage financing to save money by reducing or the premium on a new insured loan for the purchase of another home

Please contact your Account Manager for further details.

 

Mortgage Prepayment FAQs

​

  • Prepayment charges apply when you choose to prepay the mortgage balance before the Maturity Date on a Closed Mortgage.
  • Choosing the right mortgage can reduce your prepayment charges or better yet, avoid a prepayment charge altogether.

                                                                                          Scenarios, Costs and Tips 

Scenario

The Cost

Tips: How to avoid the charge?
Paying more than your prepayment privileges allows 3 Months Interest Track the value of your annual prepayments carefully to ensure they don't exceed 10% of the original principal amount in year 1 and year 2
Paying your mortage in full prior to the maturity date 3 Months Interest, Other Fees may apply (i.e. Mortgage Discharge Fee and/or Mortgage Reinvestment Fee)  If you are prepaying your mortgage in full prior to your maturity date, the 10% prepayment charge including other fees will not automatically be applied
Refinancing (increasing your mortgage balance) before the maturity date 3 Months Interest, Other Fees may apply (i.e. CMHC Mortgage Loan Insurance premium on increased loan amount) If you feel you may want to refinance at some point in the near future, consider choosing an open or short-term mortgage
Transferring your mortgage to another lender before the end of your term 3 Months Interest, Other Fees may apply (i.e. Mortgage Assignment Fee) If you feel you may want to refinance at some point in the near future, consider choosing an open or short-term mortgage

 

We have taken the confusion out of estimating prepayment charges. To proceed, you want to determine what Prepayment Privileges your existing mortgage may have, adhering to these privileges could help you avoid paying a prepayment charge altogether. Next, determine what the prepayment charges are:

Peace Hills Trust prepayment charge is 3 months’ additional interest payment if you pay more than the prepayment privilege allows.

Last, estimate your prepayment charge.

Our Prepayment Penalty Calculator (click here to view) is simple and easy to use, just click to start. You can also use this simple step by step formula to provide you with your estimate: How to manually estimate the 3-month Prepayment Charge

1st Step:

What is the amount you want to prepay on your mortgage over and above the prepayment privilege amount, if any, in your mortgage agreement?
_________ (A)  
2nd Step: What is your Current Interest Rate expressed as a decimal? (Example: 4.55% = .0455)
_________ (B)
3rd Step: A) X (B) = (C)
_________ (C)
4th Step:

(C) ÷ 4 =(D)
_________ (D)

(D) = The estimated 3-month Prepayment Charge

 

If you currently have a Closed Mortgage, there are options available that can help you reduce your mortgage balance quicker and avoid paying prepayment penalties to the lender.

  • Consider increasing your monthly payment.  Therefore reducing your mortgage balance quicker and not worry about the lender charging a prepayment penalty.  Certain conditions may apply, please speak to a Regional Office Account Manager to ask for details. 
  • Make Lump-sum payments within your Prepayment Privilege.  Instead of making an annual lump sum payment up to 10% of your original principal balance, why not make 1 or more lump-sum payments up to 10% of your original principal
  • Keep in mind, in any given year, any lump-sum payments over the 10% of your original principal will be subject to prepayment charges. Increase your payment frequency
  • Switch to accelerated weekly or accelerated bi-weekly payments and make up to an extra month's payment every year
  • Accelerated weekly and accelerated bi-weekly payment options are calculated assuming there are only four weeks in a month
  • The Accelerated Weekly Payment is calculated, for example, by taking your normal monthly payment and dividing it by four.  Since you pay 52 weekly payments, by the end of a year you have paid the equivalent of one extra monthly payment.  This additional amount accelerates your loan payoff by going directly against your loan's principal. The effect can save you thousands in interest and take years off of your mortgage
  • The Accelerated Bi-weekly Payment is calculated by dividing your monthly payment by two. You then make 26 bi-weekly payments.  Just like the accelerated weekly payments you are in effect paying an additional monthly payment per year

                                                                                        See the Benefit

Assuming Mortgage is $100,000
Interest Rate is 5.00%
Amortization Perios is 25 Years

 Monthly Payment: $581.60
Total Payments: $174,482.96
Total Interest: $74,482.96

Regular Payment Method

Accelerated Payment Method

Regular Weekly Payment: $134.00
Total Payments: $174,210.73
Total Interest: $74,210.73
Mortgage Paid Off: 25 Years

Accelerated Weekly Payment: $145.40
Total Payment: $162,258.32
Total Interest: $62,258.32
Mortgage Paid Off: 21.5 Years
Total Interest Saved: $11,952.41
Regular Bi-Weekly Payment: $268.14
Total Payments: $174,285.22
Total Interest: $74,285.22
Mortgage Paid Off: 25 Years		 Accelerated Bi-Weekly Payment: $290.80
Total Payments: $162,395.46
Total Interest: $62,395.46
Mortgage Paid Off: 21.5 Years
Total Interest Saved: $11,889.76
Note: This is provided for illustration purposes only please contact your local Regional Office to obtain further information.

Choose an Open Mortgage

  • An Open Mortgage provides you flexibility. You can prepay any amount at any time towards your mortgage without the fear of having to pay a prepayment charge for doing so

If you currently have a Closed Mortgage, there are options available that can help you reduce your mortgage balance quicker and avoid paying prepayment penalties to the lender. Here’s how:

  • Consider increasing your monthly payment reducing your mortgage balance quicker. Certain conditions may apply, please speak to a Regional Office Account Manager to ask for details
  • Make Lump-sum payments within your Prepayment PrivilegeInstead of making an annual lump sum payment up to 10% of your original principal balance, why not make 1 or more lump-sum payments up to 10% of your original principal. Keep in mind, in any given year, any lump-sum payments over the 10% of your original principal will be subject to prepayment charges.Increase your payment frequency, accelerate itSwitch to accelerated weekly or accelerated bi-weekly payments and make up to an extra month's payment every year
  • Accelerated weekly and accelerated bi-weekly payment options are calculated assuming there are only four weeks in a month.The Accelerated Weekly Payment is calculated, for example, by taking your normal monthly payment and dividing it by four. Since you pay 52 weekly payments, by the end of a year you have paid the equivalent of one extra monthly payment. This additional amount accelerates your loan payoff by going directly against your loan's principal
  • The effect can save you thousands in interest and take years off of your mortgage.The Accelerated Bi-weekly Payment is calculated by dividing your monthly payment by two. You then make 26 bi-weekly payments. Just like the accelerated weekly payments you are in effect paying an additional monthly payment per year

Administration Fees that may apply if you prepay your mortgage in full include:

  • Mortgage Discharge Fee: Administration fee for preparing the discharge request.
  • Reinvestment Fee: Administration Fee if you prepay your mortgage in full during the first term (i.e. you never renewed your mortgage)
  • Mortgage Assignment Fee: Administration Fee if you request to assign your mortgage to another financial institution, rather than a discharge.

Note: Legislation may restrict the lender from charging a Mortgage Assignment Fee in certain Provinces and Territories.

For Information on administration fees applicable in the above instances, please contact your local regional office and speak to an Account Manager.

Should you wish to speak to a Mortgage Representative regarding prepayment charges or you want to discuss your prepayment options respect of your Peace Hills Trust mortgage:

  • Visit or call your servicing Regional Office and speak to directly to an Account Manager
  • Alternatively,  Contact a Mortgage Representative* toll-free at 1-855-428-7200. For calls from the Edmonton area or from outside Canada: 780-428-7210
  • *Mortgage Representatives are available from Monday to Friday, excluding statutory holidays, between 8:30 a.m. and 5:00 p.m., Mountain Time

Mortgage Default Insurance Disclosure

The Mortgage Insurance Disclosure Regulation requires us to make the following information available to the public on request.

We must also give the information to borrowers who require Mortgage Default Insurance and we must give it to them before or when they sign a residential mortgage agreement with us. 

Financial Consumer Agency of Canada (FCAC)

The Financial Consumer Agency of Canada (FCAC) is an independent body working to protect and inform consumers of financial products and services.

Financial Consumer Agency of Canada Website​
  • We use Mortgage Default Insurance to protect ourselves in case you default on your mortgage payments or on any other term of the mortgage agreement. The insurer we use for this purpose is Canada Mortgage and Housing Corporation (CMHC). For more details on mortgage default insurance, please visit the link above
  • We pay an insurance premium to the insurer for the mortgage default insurance and we pass this cost on to you. You can pay the premium in a single lump sum or you can add it to your mortgage, in which case it will be included as part of your mortgage payment amount as disclosed on your Residential Mortgage Statement of Disclosure
  • The insurer calculates the premium amount as a percentage of the amount that you borrow. The insurer may base the premium on a number of factors, including: The Loan to Value (LTV) ratio. This is the amount you borrow relative to the price or value of the property
  • Additional details can be obtained on the insurer’s website at the link above
  • If you default and the insurer pays us, you will still remain liable under the mortgage but your obligation will be to the insurer and not to us.
  • Our relationship with the insurer is at arms-length. We do not have any arrangements to receive payments or benefits from them because of the mortgage default insurance, other than for claims
 
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